Village loses court appeal against buyback ruling

Village Roadshow's plans to eliminate an expensive form of equity and shore up control of the company have been scuttled following an adverse decision by the Victorian Supreme Court of Appeal on Friday.

Village chairman Robert Kirby said the company's proposal to buy back its 250 million preference shares had been killed off by the court's decision to uphold an earlier ruling that prevented the scheme proceeding.

He said Village had no plans to revise the buyback scheme.

"Unless circumstances change, I think the scheme of arrangement is off the agenda . . . we have not considered another scheme of arrangement in any configuration," Mr Kirby said.

"It will be a different solution but more likely it will be a solution over time, an evolutionary process over future years."

Village proposed the buyback scheme last July as an attempt to head off court action after a long and bitter campaign by institutional investors, angry the company had suspended dividends on preference shares to help fund its film production ambitions.

The scheme was initially approved by shareholders at a meeting in November. However, the vote was successfully challenged in court by a small German film production company, Boswell Filmgesellschaft, which owned 2000 shares in Village.

Boswell's managing director, German film businessman Hans Brockmann, talked to Village executives in 2001 about investing in some of its films but nothing came of it.

Boswell argued in court that Village had misinformed shareholders about their voting rights because holders of ordinary Village shares who also held preference stock were excluded from voting on the buyback. The court upheld Boswell's complaint.

In dismissing Village's appeal against that judgement, the court on Friday said the "preference shareholders and combined shareholders, in respect of their preference shares, were wrongly denied the right to vote against the buyback resolution".

Mr Kirby said Boswell had not contacted Village about the court action but he suspected it wanted to squeeze out a higher buyback offer or hoped to buy Village shares on the cheap.

"We can only surmise there was something of a greenmail type stance . . . that they thought there was an ability to put themselves in a position where they could negotiate for a different, higher deal," Mr Kirby said.